It has been predicted that US online shopping will grow at a steady rate of 10% every year, and by the year 2014 it would be 8% of the entire retail sales that happens that year in the country.

It has also been predicted that ecommerce in the European region will steadily grow at a rate of 11% during the same period of time. This unimaginable growth of ecommerce has brought along security concerns to all the players involved in a payment transaction. Cardholders are panicky about having their personal information compromised, and likewise are they worried if their financial transactions are indeed safe and secure. Similarly, card issuers also face the risk of ecommerce fraud and they have to bear huge costs in securing the payments.

The MasterCard Online Authentication Service, or OAS, is a service that covers the requirements of all the participants involved in an ecommerce financial transaction. The solution allows customers to be verified by the card issuers at the online point of purchase.

MasterCard issues this solution to card issuers on a turnkey hosted service basis and through participation in programs such as MasterCard SecureCode and Verified by Visa. Thus issuers of MasterCard, Maestro, and Visa can use the facilities of MasterCard for their ecommerce fraud prevention measures, and spend minimally on their internal resources.

OAS ensures that the issuer satisfies the highest online security standards set by the financial industry. One of the strongest features of OAS is Expert Monitoring Fraud Scoring. This feature uses a combination of scoring, modeling, rules, and event management tools to predict a fraudulent transaction during the authentication process. The scoring system uses the Expert Monitoring Fraud Models to generate a predictive score when the authorization is in progress in real-time. The value of the score is indicative of whether the transaction is fraudulent or genuine, making the platform the ideal security system for ecommerce.

The security model used for fraud detection takes into consideration data on a global perspective, including:

Geographical models like region, country, etc,

Transaction type like whether ATM, ecommerce, debit, and so on

Product models like corporate, consumer, etc,

Proprietary like standard, affluent, etc.

Expert Monitoring Fraud Scoring uses the fraud models to predict the risk a particular ecommerce transaction after analyzing the spending patterns. The system uses a combination of Artificial Intelligence, a technology known as Smart-Agents, and a set of business rules to detect fraud patterns in an effective and quick way. The system continually learns and teaches itself new and evolving fraud patterns for future fraud detection.

This system was developed using the huge repository MasterCard has of globally integrated authorization and fraud data. The system relies extensively on the Network Fraud Models for evaluating risks across geography, transaction type, and products. Likewise, it uses Custom Fraud Models to detect risks using specific data within proprietary portfolios.

Thus, Expert Monitoring Fraud Scoring delivers an increased accuracy in fraud detection. It also smartly decreases the chances of false positives by issuing predictive fraud scores for every transaction in real-time, and the issuer factors the risk of fraud based on the score value during the authorization process; this greatly strengthens the relationship between cardholders and issuing companies.

Using the system, issuers have reduced their fraud losses by almost $24 million over a 3 year time period. Ecommerce merchants can feel safe since the card issuing company has authorized the transaction as being safe.